Landlords feel 'forced' to raise rent amid rising property values

SOUTH BEND, Ind. -- Over 100 neighborhoods in St. Joseph County saw a change in property tax assessment values this year. Neighborhoods near key areas of development saw the most drastic.

This includes neighborhoods surrounding the University of Notre Dame full of rental units. Indiana does not have rent control, so landlords have the authority to increase rent. Still, local landlords say they don't necessarily want to do that to their tenants, but with property values going up, they feel forced to!

John Brady, a South Bend realtor and landlord, explains how much things have changed in recent years.

"Well, we always talked about the South Bend community being very inexpensive to buy a home," he said. "But that day is gone I think, prices just keep going through the roof."

The realities of rapidly rising rent is hitting the tenants, of course, but hitting the landlords as well.

"We're almost forced to keep raising the rents. Or, some landlords won't maintain the property because they don't have the cash flow to do it," Brady said.

Brady has been a landlord for the past decade.

"In an attempt to someday retire, we purchased three homes, and we use them as rental properties," he said.

As investment floods the region and property values appreciate, that cost often gets passed on to tenants.

"Gosh, 2019, I think I might have been at $1,000. But it's $1,300 now. And I'm going to be able to hold there for this year but, I don't know about next year," Brady said.

Landlord partners at BVR, LLC, Wakim Aboukhaled and Khalil Matta, face the same struggle.

"Everything has gone up, you know, the cost of building has gone up, the cost of maintenance has gone up, and then, you know, you add to it the real estate taxes... I don't know if we're going to price ourselves out of the market," Matta said.

"We're managing. We're cutting costs on other corners and stuff like that, but it is tough," Aboukhaled said.

They say landlords are being squeezed so hard, some are forced to cut corners. In their case, they're sacrificing some profits.

"We've accepted to eat some of our profits," Matta said. "So if we had to maintain the same level of income as last year or the year before, we would have had to increase by nearly 25 percent. And we don't want to put all that burden on the tenants."

Many of the issues with rapidly rising rent can only be curbed by addressing the housing shortage, but Brady believes rental houses should have less of a tax burden too.

"The cap on rental houses should be less than two percent," he said.

For homeowner-occupied homes, Brady said property taxes are capped at one percent. But for rental houses, it is doubled to two percent.